Natural Gas May Decline on Outlook for Milder U.S. Weather

By Naureen S. Malik -
Feb 1, 2013

Natural gas futures may fall next
week on speculation that the weather won’t be cold enough to
reduce a supply glut of the heating fuel.

Eight of 14 analysts in a Bloomberg survey, or 57 percent,
said futures will decline on the New York Mercantile Exchange
through Feb. 8. Five, or 36 percent, predicted gas will rise and
one said prices will stay the same. Last week, 54 percent of
participants said gas would advance this week.

Above-normal temperatures in the central U.S. next week may
give way to colder weather in the second half of the 11- to 15-
day forecast, according to Commodity Weather Group LLC in
Bethesda, Maryland. A drop in U.S. stockpiles last week fell
short of analysts’ expectations after frigid weather swept
through the East.

“The forecast is still bearish until the middle of
February, and March is forecasted to be warmer than normal,”
said Dominick Chirichella, senior partner at the Energy
Management Institute in New York. “The withdrawal next week is
going to be below normal,” based on mild weather this week, he
said.

Natural gas fell 14.3 cents, 4.2 percent, to $3.301 per
million British thermal units this week in New York. The futures
have dropped 1.5 percent this year.

The low in Chicago on Feb. 4 may be 26 degrees Fahrenheit
(minus 3 Celsius), 7 above normal, according to AccuWeather Inc.
in State College, Pennsylvania. New York City’s low may be 10
higher than the usual reading on Feb. 8 at 38 degrees. About 50
percent of U.S. households use gas for heating.

U.S. inventories declined by 194 billion cubic feet to
2.802 trillion in the week ended Jan. 25, the Energy Information
Administration said yesterday. Analyst estimates compiled by
Bloomberg showed an expected decline of 204 billion. The five-
year average change for the week is a decrease of 178 billion.

The gas survey has correctly forecast the direction of
prices 50 percent of the time since its June 2004 introduction.